Historic levels of violence, the swine flu, dwindling oil production, an economic recession that is Mexico's worst in decades, and a devastating drought are but a few challenges this nation faces.

Still, during his annual "informe," or state-of-the-nation speech Wednesday, President Calderón heralded his government for carrying Mexico forward while other countries may have buckled under the challenges.

Mexicans seem to agree with the assessment. In a poll published in the daily newspaper Reforma, 68 percent of those surveyed approve of their president's leadership, even though economic woes and insecurity cost his conservative National Action Party (PAN) seats in mid-term elections in July.

"Mexico as a country has done well in unprecedented circumstances," says Lorenzo Lazo, the managing partner of the Alemán Velasco & Associates, an economic and public policy consulting firm in Mexico City. He attributes the country's success to a commitment to institutions and the rule of law, despite the challenges, and Calderón's popularity to his constant dialogue with the country about what the government is accomplishing. "People understand that he has a commitment to really do his work."

10-point plan

Calderón introduced a 10-point plan for the coming year, including reforms to the telecommunications industry to make it more competitive, rooting out corruption in state energy agencies, and creating a leaner bureaucracy over all, to free up funds for social spending.

Why? "Because time and resources are running out, because the needs of the population are increasingly pressing. Today a deep reform is not only the best option, but the only option," Calderón said.

Oil output continues to fall, straining public spending. Oil export revenue funds some 40 percent of the federal budget. Measures taken during the swine flu outbreak this spring decimated the tourism industry. The recession has been particularly severe in Mexico, which sends over 80 percent of its exports to the US. The auto industry here has been hard hit, and the economy is expected to shrink by 7.5 percent this year, says Mexico's central bank.

Still popular

Despite such challenges, though, Calderón's popularity remains high. In another recent poll, by Mitofsky Consulting, 62 percent of Mexicans approve of his leadership. That is in part because many of the nation's gravest issues are seen as outside of his control. "He has been able to exonerate himself from the crisis," says Jorge Buendia, a pollster in Mexico City. Perhaps most important, says Mr. Buendia, inflation has remained low – far more so than during other economic crises.

Success in the drug war?

The state-of-the-nation report began with a list of his administration's successes, beginning with what has been the cornerstone of his presidency: the fight against organized crime. As he detailed successes in a battle that has taken over 11,000 lives in nearly three years, images of drug and arms seizures flashed on two giant screens.

Yet, in his 10-point plan, organized crime was listed toward the bottom – perhaps a signal that the economy will become the centerpiece of his agenda during his last three years in office. "The severe economic recession of the country is so noticeable, he has to put it on top of his desk," Mr. Lazo says. "The country cannot stand a long recession, so the government has to take charge."

Where will the money come from?

But whether he'll be successful moving forward remains an open question. His proposals, while vast, included few details, and how to fund them will be the controversial element in coming weeks. "I think that in general, everyone is going to agree with the ends but the means is what is going to be debated," says Buendia. "The big question to be answered is where the money will come from."

And navigating the political scene will be a challenge. Calderón's revised agenda comes as the new Congress sits – one with more opposition members. Some of his plans, for example to boost revenues in light of falling oil output with non-oil taxes, has already been rejected by the opposition.

But, for now, his tone struck a note of optimism. "It's been a particularly difficult year for Mexicans," Calderón said, "but instead of being intimidated by adversity, we have confronted it."